San Francisco City Hall is lit up with orange light on Monday, October 4, 2010.

Photo: Carlos Avila Gonzalez, The Chronicle

San Francisco City Hall is lit up with orange light on Monday,...

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Late Wednesday evening an inbound N Judah train hit and killed a person. Witnesses said the blocks between 30th Avenue and 28th Avenue where closed for several hours for emergency crews. In 2007, 7 people were reportedly killed by MUNI and the death toll in 2008 growing.
Mike Kepka / The Chronicle

The current budget cycle will end with a $129.1 million surplus, $80 million more than previously anticipated, according to a new budget report released Monday by the Office of the Controller.

"We're still not out of the woods, but it's very good news," said Kate Howard, the mayor's budget director.

The new deficit for the fiscal year that starts July 1 is now $229 million, down from the earlier projection of $263 million. And that was whittled from an earlier assumption of $458 million.

The new projected deficit for the fiscal year that starts July 1, 2013, is now $364 million, down from the $375 million estimate that came out two months ago, and far less than the original $619 million estimated shortfall.

Driving the better-than-expected budget news is a bounce in revenue from the city's property, payroll, sales, hotel and parking taxes.

The city's economy, mirroring the nation's, imploded in late 2008 and began a slow climb back starting last year, said City Controller Ben Rosenfield. The new numbers show continued recovery that is more robust than City Hall numbers crunchers expected.

And while deficits still loom, the projected shortfalls are more manageable. "We won't have to rely as much on significant service reductions and fee increases as we have had to in recent years," said Board of Supervisors PresidentDavid Chiu.

The Municipal Transportation Agency, which is bracing for two more years - at least - of escalating deficits, is set to benefit from the stronger tax revenue, in the range of $13 million next year.

Mayor Ed Leesaid that, while the economy is improving, there's still a lot of work to do. The city, with a $6.8 billion budget this year, faces continued increases in the cost of employee salaries and benefits.

"While I am excited to learn that key indicators in San Francisco's economy are showing growth," Lee said, "we must remember that our focus on long-term financial planning, two-year budgeting and smart, good-government policies are still critical to fixing the structural imbalance in our city's budget and protecting our future economic growth."

Upstaged: We told you recently that San Francisco's universal health care program had been named one of six finalists - out of 563 applicants - for Harvard University's Innovations in American Government Awards.

Richard Scheffler, a professor of health economics at UC Berkeley, evaluated Healthy San Francisco on Harvard's behalf and said, "This is kind of like the Academy Awards, you know. If you get nominated, you're actually the winner." Sadly, this time around, New York City is the Meryl Streep of this race - and San Francisco has a smile plastered to her face in case the cameras pan to her in the audience.

The big winner, named Monday, is New York City's Center for Economic Opportunity, established by Mayor Michael Bloombergto combat poverty among low-income workers, at-risk youth and families with children. As the winner, it will receive $100,000 to help other cities replicate its efforts.

Healthy San Francisco, created in 2007, serves 55,000 patients who are treated at 33 locations. More than 85 percent of those lacking health insurance in the city now have a primary-care doctor. It costs $177 million a year, $100 million of which came from the city. The rest is paid through participants' fees and mandatory employer contributions.